Today’s post comes from Amy Nickson, a finance writer and professional blogger who also contributes to the Oak View Law Group. Please share your thoughts in the comments below.
Being in debt is emotionally draining. When people feel stressed about money, they try everything to get out of it—seeking debt relief, taking a consolidation loan, or transferring balances to a new card.
Paying off debt takes time, energy, and focus. You need financial discipline to become debt-free. But that effort can bring other costs you might not expect.
Because it’s so hard to get out of debt, people are rightly proud when they do. But it’s easy to forget that some expenses and trade-offs remain even after the debt is gone.
One issue is family tension. Loved ones may not understand your fear of falling back into debt. They might resent being asked to cut back or not get what they want. Talk with your family before you start aggressively paying down debt. Explain how becoming debt-free benefits everyone, what you’re asking of them, and what changes they’ll need to accept—like less family time if you take a part-time job. These adjustments can be hard to swallow, so be patient and help them see the long-term gains.
Another risk is neglecting retirement savings. You do need to save steadily for retirement; carrying debt can hurt that plan, but throwing all your money at debt and ignoring savings can leave you unable to stop working later. Limited savings can create big problems down the road—your lifestyle could suffer or you could end up with new obligations.
Balance is key: continue funding retirement accounts (401(k), IRA, Roth), an emergency fund, and other investments while paying down debt. That might sound overwhelming, but a little planning goes a long way.
Start with a budget. Cover fixed costs first—retirement and emergency contributions, utilities, debt payments, mortgage, insurance—then set aside some money for enjoyable things so you don’t burn out.
Living within your means is essential. Cut back on extravagances like frequent dining out, constant partying, heavy credit card use, and impulse buys. Stopping those habits prevents new debt and frees up savings. Even after you’re debt-free, resist the urge to jump back into a lavish lifestyle—no constant fancy trips or impulse purchases. That doesn’t mean you must deprive yourself; you can still enjoy treats within a reasonable budget.
Also remember your health. Long-term financial stress can damage your health, which is one of the worst possible outcomes of focusing only on debt elimination. Stress often leads to other health problems. Take care of yourself while balancing debt repayment and saving for retirement—otherwise you won’t be able to enjoy life when you finally stop working.
Each life phase matters. When you’re in debt, focus on living within your means and learn to say “no” to costly temptations. Becoming debt-free may require sacrifices, but plan with purpose so you avoid future debt while still saving for the future.
Cubert’s note: I like Amy’s idea here. A single-minded focus on getting out of debt can carry real costs—alienating loved ones, derailing long-term savings, and hurting your health. Balance is the answer. For example, in our household we’re determined to pay off the mortgage, but we still keep contributing to our 401(k) and HSA. I hope you enjoyed today’s guest post—thanks, Amy!